Sai Balaji Enterprises V. The Assistant Commissioner of Income Tax, Circle 9(1), Aayakar Bhavan, Hyderabad

ITTA/557/2013

AI Insights

The case involves M/s Sai Balaji Enterprises, the appellant, contesting a decision by the Assistant Commissioner of Income Tax, Circle 9(1), Hyderabad, regarding the assessment year 2009-10. The primary legal contention was whether the Tribunal was correct in reversing the decision of the Commissioner of Income Tax (Appeals) without adequately addressing the applicability of the Supreme Court's decision in Brij Bhushan Lal Parduman Kumar. Additionally, the dispute centered on the Tribunal's decision to estimate the income at 5% on sub-contract receipts, contrary to the Assessing Officer's estimation of 2%, which was initially upheld by the CIT (A). The High Court found that the Tribunal had the authority to modify the earlier order and upheld the modified estimation of income at 2%.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 805144 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 06-11-2013
• Assessment Year: misc
• Other Referred Cases: Brij Bhushan Lal Parduman Kumar Vs. Commissioner of Income Tax (1978) 115 ITR 524
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Assessment Year 2009-10; Estimated Income; Income Tax; Sub-contract receipts; Seignorage Charge
• Section: 254(2)

Judgement Text

"HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.557 of 2013 Date: 06.11.2013 Between: M/s Sai Balaji Enterprises, 1-1-394-G-1, Phase-I, Mohannagar, Kothapet, Dilshuknagar, Hyderabad, represented by its Managing Partner Sri V.Koteshawar Rao. .....Appellant AND The Assistant Commissioner of Income Tax, Circle 9(1), Aayakar Bhavan, Hyderabad. ...Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.557 of 2013 JUDGMENT: (per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta ) This appeal is preferred against the judgment and order dated 07.06.2013 passed by the learned Tribunal in relation to the assessment year 2009-10 and sought to be admitted on the following suggested questions of law: (1) Whether, on the facts and in the circumstances of the case, the Tribunal is legally correct in reversing the decision of Commissioner of Income Tax (Appeals), without stating as to why the decision of Supreme Court in the case of Brij Bhushan Lal Parduman Kumar followed by him, is not applicable? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is legally correct in reversing the decision of Commissioner of Income Tax (Appeals) that Rs.11,57,56,058/- being seignorage charge has no income element, though no evidence was brought on record by the Revenue before the Tribunal? We have seen the record. The undisputed fact is as follows: After the impugned judgment and order was passed by the Tribunal, the assessee made an application before the Tribunal under Section 254 (2) of the Income Tax Act on 28.06.2013. In that application, the assessee contended amongst other is as follows: “The Honourable I.T.A.T., in its order further went on to observe in para-7, considered the above receipts to be sub contract receipts without giving any finding as to how it is not cost of material supplied and observed as if the assessee’s AR submitted that the percentage of income is only 2% when such a submission was not made since it is the case of the assessee that there is no income on this and the income admitted on the other receipt is more than 9%. The I.T.A.T. went on to give directions to estimate income after verification, at 5% on the ground that on sub contract receipts the I.T.A.T. consistently holding that the percentage is 5%. It is to humbly submit that this direction is contrary to the decision of Supreme Court that the I.T.A.T has no power to enhance. The AO estimated the income on this receipt of Rs.11.57 at 2%. The learned CIT (A) deleted it. The AO during the appeal proceedings before the CIT (A) has only requested in the remand report to estimate the income at 9% but has not filed any petition to enhance. In such a case, the learned CIT (A) has to issue a notice for enhancement. Mere request in a remand report does not amount to seeking enhancement. In such circumstances, directions of the Tribunal to estimate income at 5% as against 2% estimated by AO which is deleted amount to enhancement which is not correct.” After hearing the aforesaid application, the learned Tribunal has decided in the manner as follows: “We have heard the arguments of both the parties and perused the record. The ground before the Tribunal is with regard to deletion of additional made towards estimated income at 2% on Rs.11,57,56,058/- as the assessee would not have undertaken to execute work on such a large scale without any profit element. Being so, the Tribunal must have confined to the adjudication to the extent of deletion of 2% on sub- contract receipts of Rs.11.57 crores, instead, the Tribunal gave a finding that to estimate the income at 5%, though, the Assessing Officer himself has estimated the income at 2%. In our opinion, it is proper to confirm the addition at 2% made by the Assessing Officer instead of enhancing the same to 5%. Accordingly, we modify the order of the Tribunal as under: “The Assessing Officer is justified in estimating the income at 2% on sub-contract receipts of Rs.11,57,56,058/-. The order of CIT (A) is reversed on this issue.” Accordingly, Para-9 of the impugned order may be read as under: In the result, revenue appeal is partly allowed.” It appears that in the application under Section 254 (2) of the Income Tax Act it was stated and so also the learned Tribunal recorded that the Supreme Court decision in the case of Brij Bhushan Lal Parduman Kumar Vs. Commissioner of Income Tax (1978) 115 ITR 524) is to be considered. Though the learned Tribunal has not specifically dealt with the later order, but has modified the earlier order. According to us, the issue, which is raised before us, would have been a valid issue if the assessee had not made any application as above. In our considered view, after approaching the learned Tribunal on the limited issue, the appellant should not be permitted to come before this Court under Section 260-A of the Income Tax Act, 1961 on the same and identical issue. We therefore, do not find any reason to admit this appeal. Accordingly, the appeal is dismissed. Miscellaneous petitions, if any pending, shall stand dismissed. No order as to costs. ___________________ K.J. SENGUPTA, CJ _________________ SANJAY KUMAR, J 06.11.2013 Gsn "